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1 1 (January 17, 2017)

handle is hein.crs/govceyz0001 and id is 1 raw text is: Intergenerational Income Mobility January 17, 2017 In a mobile society, individuals' incomes and income rank rise and fall over time. Intergenerational income mobility describes these patterns across generations; specifically how children's incomes in adulthood compare with their parents' incomes in the past. There are several ways to assess the degree of intergenerational mobility, but fundamentally, a society exhibits more intergenerational mobility where children's incomes are less determined by their parents' income or rank. By contrast, where income mobility is lacking, individuals are more likely to remain at the economic position of their upbringing; the rich stay rich and the poor stay poor. Strong intergenerational income mobility is generally appealing because it means that children are not entirely constrained by the resources or economic status of their childhood. Instead, building blocks of economic prosperity (e.g., education, health, credit, and job markets) are broadly available, and effort, education, investment, and talent can generate economic success regardless of a child's starting point. Optimism in the United States about broadly shared economic opportunities has waned recently and concerns about declining mobility have been bolstered by new research findings that indicate a falling trend in the share of children who have higher incomes than their parents did, when compared at similar ages. mes~kang hntrgeneraknd mobMtv In broad terms, intergenerational income mobility measures can be grouped into two categories: absolute measures describe children's income levels (in inflation-adjusted dollars) relative to their parents' at similar ages, and relative measures compare children's rankings in the (contemporary) income distribution to their parents' placement in a past income distribution (i.e., the family's rank during childhood). Figure I. Absolute and Relative Income Mobility Source: Congressional Research Service. Absolute and relative income mobility measures do not necessarily have the same magnitudes nor must they move together over time. Because distributional rank describes one's placement relative to others, it is possible for incomes to rise in absolute terms but distributional rank to remain unchanged or decline. This is illustrated in Figure 1, which depicts an individual (solid line) who is mobile across generations in absolute terms (i.e., higher income), but not in relative terms (i.e., rank is unchanged). The dashed line indicates an individual who is mobile across generations in both relative terms and absolute terms. Efforts to estimate the degree of intergenerational income mobility in the United States have encountered several empirical hurdles, including a paucity of datasets that track incomes across generations, small sample sizes, and imprecise measurement of incomes. In addition, analysts must decide how to define incomes and select methods to ensure that child-parent comparisons are meaningful. These choices include selecting a price deflator to inflation-adjust parents' incomes, identifying the ages at which children and parents were at comparable life stages, and accounting for changing trends in household size and composition, the value of non-cash benefits (e.g., employer-sponsored health insurance), and work-related costs associated with dual- earner households (e.g., child care). Many studies use data from the Panel Study of Income Dynamics (PSID), which has collected information from a large-scale nationally representative sample of families since 1968. Important to mobility research, the PSID continues to collect information on children who reach adulthood and leave their parents' home. It also contains information on education and other factors that may help discern drivers of the parent-child income connections. A recent and promising development to intergenerational mobility measurement is the publication of a detailed set of mobility estimates by researchers at the Equality of Opportunity Project, based on a large sample of federal income tax records. A 1986 change to the U.S tax code that required tax return filers to provide dependents' Social Security numbers allowed for a direct comparison of the income distribution rankings of families in 1987-1998 to later rankings of children from those families in 2000-2012. Recent studies indicate that large shares of children have higher incomes (in adulthood) than their parents did at similar ages (i.e., indicate upward absolute mobility), but also offer some evidence that this share has declined among children born between 1940 and 1984. In terms of relative mobility, the share of children who rise to a higher distributional rank than that held by their parents is lower, but does not appear to have changed discernibly for individuals born between 1971 and 1982. .O 'T gn'a', ggmm , q rq\\ 's a X 11LULANJILiN,

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